A business plan is an organizational roadmap to take a company from where it is today up the often steep mountain to a distant corporate goal. This roadmap, with its vision of the future, milestones and measurements of success, is a vital part of corporate strategy execution.
A good business plan has many elements, including a statement of the company’s market and how that market is expected to evolve over time, specific steps that a firm will take to achieve its goals and the human and financial resources that are required to meet business performance targets. While these general elements are typically found in almost every business plan, to maximize the chances of success it is important for a business plan to be aligned as closely as possible with a firm’s unique way of doing business: its corporate DNA.
Just like people, every company is a set of numerous attributes, characteristics and operating environments that make it different. This uniqueness affects how companies view the world, how they see risks and opportunities and how they frame and carry out solutions to problems. No two companies see the same thing in exactly the same way.
Elements of Corporate DNA
A company’s DNA has many components based on the nature of the company’ leadership, how the company is organized and how it implements decisions.
CEO Leadership Style. Many companies mirror, to greater or lesser extent, the approach and leadership style of their CEOs. Some CEOs project and enforce a very structured approach regarding how the company operates while others give large amounts of autonomy to different departments or persons.
Apart from degree of involvement, some CEOs by definition lean towards long-term planning and incremental action while others tend to be more influenced by intuition and gut feelings and look for game-changing wins as they confront different types of business situations.
These tendencies have important ramifications regarding how business plans are structured, because a business plan built on the assumption of staying the course even in the face of countervailing short-term market changes is very hard to implement with a CEO who changes direction frequently. On the other hand, if a company operates in an environment with a constantly shifting business landscape, roping itself to a single path of action no matter what can lead to disaster if business realities head in an unexpected and unfavorable direction.
Organizational Structure. Firms have many vertical and horizontal organizational structures, ranging from ones with narrow and well-defined chains of command to others that have flat organizational environments, constantly rotating organizational change makers and approaches that are highly adaptable to changing circumstances.
Since a business plan by definition typically requires a company to alter what it does in some fundamental way, business plans that require a major change in corporate approach are often difficult to implement in organizations with rigid organizational structures. Conversely, if a firm is functioning well and the business plan in essence calls for doing more of what the firm is already good at, a plan that calls for a major shift in approach may cause a company to sacrifice its core strengths. This may ultimately put a firm in a worse position than it was when it started.
Firm Geographical Structure. A firm’s geographical structure refers to how its offices and workers are physically spread out. Some firms may be concentrated in a single area or even a single building while others are highly dispersed with many people working remotely or even offices that are located in different parts of the world.
A firm’s geographical structure affects the implementation of a business plan because business plan execution requires sustained and coordinated action and action is almost always more difficult to coordinate over any significant distance.
Additionally, a plan that is very reasonable for one office to implement may be impossible for another office to carry out in light of available resources or operating realities. Accordingly, the potential of a business plan’s success has to be viewed as the sum total of the potential actions of often many micro-corporate environments. A business plan should convert a firm’s geographical structure into a strength rather than a liability.
Firm Resources. The amount of resources a firm has and how those resources are distributed is an important component of its DNA. Some firms have large amounts of physical assets and little digital infrastructure while others have almost no physical assets and a significant amount of corporate value in the form of intangible know-how or commercial relationships.
The amount and nature of firm resources impacts business plan implementation because all business plans require firm assets to be marshalled in some way and changes in how available assets are used or a need to obtain new types of assets can add significant levels of complexity to business plans.
If a real estate company has a large land bank, a plan to sell off the land to generate cash for other types of activities typically does not require a massive change in the firm’s basic organizational structure or approach. On the other hand, if the same company has very little digital presence and wants to build a platform based on artificial intelligence to reach more potential real estate buyers, this may require a very large change in how the firm thinks and works.
Firm Culture. Every firm has its own particular culture. For firms that are international, this often involves a particular mix of cultural influences, values and languages. A firm with a large presence in Japan with a large number of Japanese workers can have a cultural enviroment that is very different than, say, one that that is based in Spain with a large team of people from Spain. This cultural make-up and often the cultural tendencies that go with it have a large impact on how businesses reason and act.
When assessing a potential plan, these cultural realities have to be given careful thought. Plans that require a firm with a cultural mind set that tends to be heavily inclined to careful planning and methodical action to suddenly improvise will often have a low success rate.
Firm Personalities. Within the general cultural framework of a company, another DNA component is the personalities of individual people who make and carry out decisions and whether they are optimistic or pessimistic and individualistic or collaborative. These personalities are in many cases the front line of any business plan implementation and are the points of intersection between abstract business plan dictates and concrete business plan steps.
Because of this, when designing a business plan it is wise to create and allocate action steps that play to team members’ individual strengths rather than setting the bar at a height that many people will not be able or even willing to jump.
External Relationships. Firms do not live and act in a business vacuum; their appoach to doing business is directly impacted by key firm relationships. For example, firms who constantly interact with government agencies often have ways of doing business that match the business expectations of these agencies and can become, at one level or another, cultural and operational extensions of these agencies.
This means that when designing a business plan it is important not to view the firm that will carry out the plan as isolated from its business partners and client relationships but rather as intertwined with and dependent on those relationships for any significant corporate growth. Any path forward must reflect and include the day-to-day realities, interactions and emotions that are the product of these external relationships just as well as those that comprise the firm’s internal operating environment.
Conclusion
When preparing a business plan it is important not only to evaluate the plan’s strength given the firm’s current position and market conditions, but also to consider the firm’s corporate DNA. Putting in place a plan that is not only right given abstract numbers but right for a particular firm given its operating strength, weaknesses, business approach and personality is not only more likely to succeed, but also more likely to avoid the many types of setbacks, losses and negative changes in team spirit that can occur if a square firm tries to fit into a course of action shaped like a circle.